The latest spat between the Trump administration and the Federal Reserve is sounding more like a home-improvement reality TV show.
But the stakes are much higher: monetary policy at the world’s most important central bank and its independence from political pressure.
The argument comes as President Donald Trump continues to demand that Chairman Jerome Powell lower interest rates. But Powell and most other Fed policymakers have maintained a wait-and-see approach, saying Trump’s tariffs could stoke inflation later this year.
Now the White House is accusing Powell of mismanaging the Fed, which is a self-funded agency, as well as renovations at the central bank’s headquarters in Washington, DC.
Powell’s recent statements that there are no plans for a VIP dining room, new marble, special elevators, new water features, or rooftop terrace garden suggest plans changed from what was approved in 2021, according to the letter, which also listed nearly a dozen questions on the project.
“Although minor deviations from approved plans may be inevitable, your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements,” Vought wrote.
On Sunday, National Economic Council Director Kevin Hassett upped the ante further, indicating that Powell’s job could be at stake.
The Fed said the renovation will remove asbestos and lead contamination as well as replace antiquated electrical, plumbing, HVAC, and fire-safety systems. Major structural work will also bring buildings up to code on accessibility, security, and safety standards.
It attributed cost overruns to changes stemming from consultations with review agencies; actual costs of materials, equipment, and labor; unforeseen conditions like more asbestos than anticipated, toxic contamination in soil, and a higher-than-expected water table.
The FAQs also addressed details like marble, the VIP dining room, new elevator, water features, and garden terrace.
Prior to the current project, the Fed’s Marriner S. Eccles building hasn’t been overhauled like this before.
“While periodic maintenance and work has been done to keep the building occupiable (including a project in the late 1990s), there has been no comprehensive renovation since it was constructed nearly 100 years ago,” the Fed said.
But even installing a new Fed chief who is more aligned with Trump won’t guarantee that rates will come down.
In addition, whoever the next Fed chair is, a Trump loyalist or not, he or she must still work with the rest of the consensus-driven FOMC, where it’s rare to have even a few dissenters on a policy decision, Ed Yardeni, president of Yardeni Research, said in a note last week.
If a loyalist takes over and is too much of an outlier on monetary policy compared with the rest of the FOMC, then the chair could be outvoted.
“That would seriously weaken the power of the Fed chair and raise concerns about the internal conflict with the Fed,” Yardeni warned.
